A Comment -- General Comments From an Expert (A Commentary)

ETF & Mutual Fund: ETFs are more diversified, less taxed butthe main difference is cost – ETFs are much cheaper.

Corporate vs. Government bonds: Corps have much greater risk of going under.

When he was on last labour day, be thought they would be in a range for a year and we are half way through that. The market has found its equilibrium. Strategy is to go with a broader portfolio. Don’t play a sector or time markets. Buy more when it’s down and sell some when it’s up.

Nice rebound because there is a little more certainty about the financial system around the world. No huge returns on the markets in the short term. Question is whether with the stimulus off, will there be growth. We’ll end up with a positive return, but not sure if it will be a huge return. Thinks Greece, Portugal or whoever needs it will be bailed out by the EU. Lots of staples and healthcare in his portfolio. Is selling some stocks with a full valuation.

The fed is not interested in scaring the market so it raises rates very slowly. Stocks are fairly valued. What you should look at is higher paying dividend-paying stocks. It’s a stock picker’s market. Previously a lot of earnings came from cost cutting. Now we need to see earnings from growth. It’s going to take a little while for the economy to heal itself.

You should own good income trusts at this point. Real estate happens to be a good trust structure. Some others will have tax losses to use after they convert. Cineplex is a great trust, for example. West Shore has no debt and lots of cash so they wont stop paying their dividend.

Earnings season has been great despite a fear it would not be. There have been cases of all-time record earnings. Prices are falling but fundamentals are rising, which creates value. Sovereign debt concerns are keeping the market’s feet on the ground.

From the highs until a week or so ago we were down about 8%. He thought it would go further. The reasons were 3 – (1) it was very over bought; (2) people were concerned about Chinese tightening; (3) debt crisis in Greece. The later gives him some concern. Wonderful company results were partly based on conservative guidance from the companies. He is glad to see it but takes it with a grain of salt. He looks for income in stocks, not just capital gains.

Looking at individual companies for value. Using put options to create protection. They are partially edging their portfolio against decline. Telco sector is at 18% of portfolio. He is looking at technology pullbacks for opportunities.

We came back from the long weekend and people realized the European situation was going to be dealt with. Doesn’t have a strong price run-up case for oil. Outside of some kind of shock, $70-$80 range. Bearish on Natural Gas for over a year. She looks for management experience and profit indicating a higher stock price or room for growth.

Thinks the Precision Drilling conversion to a corporation makes a lot of sense. The drillers had a little experiment in converting to the income trust structure and done simply for a multiple premium, but in the longer run it makes a lot more sense for them to be a common share format. Change to an income trust was the right thing to do at the time. Bond spreads have really widened out in the last little bit, but he has migrated half of the bonds over to bank loans.

H & R REIT Bond – 7 Years. They do a good job of matching the assets to the bonds. The tenants in their buildings are long-term tenants. He wouldn’t recommend a bond from a hotel REIT because the tenancy is for over night.

CIBC Tier one bond 10%. Good certainty that the bond will get called so then you loose the extra value the bond has gained. It is less attractive than a year ago.

Bonds of Opti-Canada. 8.25% Dec 15/2014 (Top Pick Apr 27/09, Up 69%)

Markets haven’t really done anything for 5 months. They are trying to find the direction. It’s a pretty flat market. You want to sift through the good from the bad. Growth will continue. The fix to the financial crisis is in. Rising interest rates will set the course for the markets. He looks for companies that can consistently grow their dividends. Look for companies that take the capital in the business and then keep re-investing it.